AMD Could Steal Significant Market Share From Top Competitors, Analyst

The microchip designer's shares are up almost 9% from Tuesday's close ; pressing pre-market up over $29.

AMD Stock

AMD’s (NASDAQ:AMD) stock shot up more than 11% Wednesday after the chip company received a positive note from Nomura’s David Wong.

The analyst, who initiated coverage of the name with a “Buy” rating, said AMD, thanks to its “solid positions” in both the x86 microprocessor and standalone GPU markets might well be able to gain meaningful market share from top competitors Intel (INTC) and Nvidia (NVDA). Wong thinks the Santa Clara, Calif. and Austin, Texas-based firm has an opportunity to grab market share with the launch of its new microprocessor and GPU families, driving sales growth and strong financial results in the coming years.

The analyst predicts that AMD’s share in the datacenter processors market will increase to 10% or more from 4%. He sees shares rising 15% to 20% from 12% in desktops and notebooks and 30% to 40% from 20% in desktop and mobile GPUs.

“We believe that further share momentum, as well as favorable mix, will help drive AMD’s sales growth through 2019, 2020, and beyond,” wrote the analyst, setting a $33 price target on the stock.

After highlighting AMD’s “high revenue growth and rapidly improving profitability”, Wong said AMD’s earnings per share (EPS) is set for significant growth. The analyst expects profits to be so strong that the company could show earnings power of $2 a share – a 335% increase from AMD’s $0.46 in annual EPS in FY 2018.

It’s worth noting that AMD has a broad exposure to multiple secular growth industries, including gaming, data-centers, automation, and artificial intelligence.

Price Action

AMD shares were trading up by 0.90% at $29.28 in Thursday’s early session. Ticker has risen nearly 60% so far this year and 167% year-over-year, far outpacing the 7.7% gain of the S&P 500.

References: CNBC, The Fly

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